Mukesh Ambani to acquire Paytm wallet? Jio Financial shares soar after report
Paytm is going through its toughest crisis since Reserve Bank of India imposed restrictions on it last week.
Jio Financial Services shares rallied up to 14% to day's high at ₹288.75 on BSE after a newspaper report claimed that One 97 Communications -- Paytm's parent company -- is in talks with the Mukesh Ambani-owned NBFC and private sector lender HDFC Bank to sell its wallet business.
Jio Financial late in the evening clarified that it has “not been in any negotiations in this regard”.
Read more: Frenzied Paytm employees flood recruiters with job applications amid crisis
Is Paytm's wallet business on the block?
The Hindu Business Line reported that HDFC Bank and Jio Financial are said to be among the frontrunners to acquire Paytm's wallet business. Paytm CEO Vijay Shekhar Sharma's team is said to be in talks with Jio Financial since last November, as per the report, but talks with HDFC Bank began just ahead of RBI's ban on Paytm Payments Bank.
Why is Paytm in crisis?
As part of a larger bailout plan, according to the report, Jio may offer to acquire Paytm Payments Bank as Paytm faces an existential crisis ever since Reserve Bank of India (RBI) barred the payment bank from accepting any deposits or credits to customer accounts.
Read more: Paytm's Vijay Shekhar Sharma tells employees amid crisis: 'Don't know what…'
Agencies are looking at the possibility of the entity being used as a front to launder money, it was earlier reported by PTI. Paytm has denied all allegations and said that neither the company nor its founder and CEO are being investigated by the Enforcement Directorate on money laundering charges while shares of Paytm lost 42% in just 3 days following the RBI diktat.
Read more: LIC soars 9% to breach ₹1000-mark for the first-time ever: What's happening
What are Jio Financial's plans?
Jio Financial owns Jio Payments Bank which has re-platformed to launch digital savings accounts and bill payments. With a ground network of 2,400 business correspondents, it has also launched debit cards. Jio has carried out a pilot launch of Jio Voice box, enabled Jio phones with UPI and is implementing QR codes across the ecosystem as well.
What Paytm CEO said about the crisis?
Meanwhile, Paytm CEO Vijay Shekhar Sharma said during a virtual town hall with employees of Paytm Payment Bank Ltd (PPBL) that there is nothing to worry about.
“You are a part of the Paytm family, and there is nothing to worry about. Many banks are helping us. We are not completely sure of things…like what exactly went wrong. But we will figure out everything soon. We will reach out to the RBI to see what can be done,” he said.
This story has been updated to incorporate Jio Financial Services response.
